What's AOL Worth in a Web 2.0 World?

This week regular contributor and Twitter friend Paisano decided to give Yahoo/delicious a break and take on AOL. I asked him to do a post on why AOL was still valuable from a techie's point of view, given the talk of selling off parts and who would buy them, at what price. It turned out to be a pretty hard assignment! As always if you'd like to write a guest post for sarahlacy.com contact Olivia at Olivia at sarahlacy dot com. Enjoy!

In researching what AOL has to offer in today's web 2.0 climate, I was stunned to see how little they had to offer. It was baffling to see so few popular services from the once and mighty online kings. It leads one to ponder how relevant America Online is anymore. Let's examine closely what they provide America and the world these online, shall we?

 

AOL's Value

As the Yahoo-AOL rumor heats up, Time Warner has reportedly given AOL a $10 Billion valuation not even counting its dial-up services, so it must be worth something, right? Well, that all depends on what you consider value. Contrary to Time Warner's generous estimate, the Wall Street Journal thinks AOL isn't worth more than $3 or $4 Billion based on Ad-sales and business content. Either way, it's still a big chunk of change. Still, where's the beef? Meaning, what does AOL have to offer the online world besides traffic generating marketing?

 

Bad AIM

Ameria Online used to be the masters of dial-up internet. It also had the best instant messenger service otherwise known as AIM. For many years they rejected all of the rejects to open up their IM platform so other services could work with it. They even went out and bought ICQ which was a competitor. By the time they gave in to pressure from the masses and opened their platform it was too late. Other players appeared on the scene and stole the show such as Meebo which works within a browser with all of the major messenger services as well as AOL. The only hope for AOL is their recent announcement of an Open AIM platform which will include revenue sharing. There are an estimated 80 million AIM users so the numbers are there.

 

NetScraped

In an ironic twist of fate, the former number one internet service became owners of the former number one internet browser, NetScape.  Unfortunately, AOL could not keep the former king alive and pulled the plug officially in December 2007.

Too Little Too Late?

AOL recently acquired an interesting lifestreaming startup called SocialThing which is a lot like FriendFeed. SocialThing is in essence a social networking aggregator which is the hottest thing right now on the web 2.0 scene. Why did AOL buy a service that was still in private Beta and didn't even work on Internet Explorer yet? Rumor has it they want to use the developers to update their stale old buddyUpdate service. We shall see soon what becomes of it. [ed. note: When I was at AOL last month, Frank Gruber was talking about some innovation here, I believe. Hoping Mr. Gruber weighs in in the comments, or better writes a rebuttal on why AOL is worth something in a Web 2.0 world...Frank?]

 

Circling the Drain

The obscene amount of money ($850 Million) AOL spent for the social network BEBO in March 2008 still has everyone scratching their heads. No one knows why they made this move and the jury is still out on whether or not anything will ever come of it.

 

XDrive for Sale

More rumors abound for another once promising AOL online storage service called XDRIVE. After spending a reported $30 Million for the service three years ago, they are trying to unload it for $5 Million and its value is dropping by the minute.

 

 

The Defening Silence

In doing this research I asked the everyone I knew online what they considered useful and vital from AOL and the response was shocking. I got mostly silence! That takes some doing with my otherwise VERY vocal and noisy group of friends online. No one had anything nice to say about AOL services. The only thing I got were jokes about missing all the free CD's AOL used to send in the mail (OK, I was the one who said he missed the coaster collection I had with their CD's).  

 

The Verdict

So will AOL be relevant again? Can they rise from the ashes like the Phoenix or continue to sink into the corporate primordial ooze in Time-Warner's swamp? The best move for AOL would be to get out from beneath the clutches of their behemoth ruler. Whether it's Yahoo, Microsoft or any other tech organization, AOL's future would be better served with more technological master.